Carney Promises to Scrap GST for First-Time Homebuyers – Here’s What It Means

Carney Promises to Scrap GST for First-Time Homebuyers – First-time homebuyers in Canada may soon receive a major financial break. Prime Minister Mark Carney has promised to scrap the Goods and Services Tax (GST) for first-time homebuyers purchasing homes priced at or below $1 million. This proposed policy change aims to tackle housing affordability and help more Canadians enter the property market without being burdened by high upfront costs.

This move, if implemented, could result in savings of up to $50,000 for eligible buyers. In this article, we’ll break down what this GST exemption means, who stands to benefit, how it might affect the broader housing market, and how buyers can take full advantage of this opportunity.

Carney Promises to Scrap GST for First-Time Homebuyers

Mark Carney’s promise to scrap GST for first-time homebuyers could bring substantial savings and improve housing affordability across Canada. While the policy may have limited impact in high-cost cities, it offers a significant boost to buyers in more affordable regions. By combining this GST break with other government incentives, first-time buyers can unlock meaningful financial benefits. Staying informed and planning early can help prospective homeowners make the most of this opportunity.

Understanding GST on Home Purchases

In Canada, GST (Goods and Services Tax) is a 5% federal tax applied to many goods and services, including the purchase of new homes. For a home priced at $800,000, for example, the GST would amount to $40,000. This tax is often a significant upfront cost for buyers, especially first-timers who may already be stretching their finances.

By eliminating GST for first-time homebuyers, Carney’s plan would remove a major financial barrier, making it easier for many Canadians to afford a home.

Who Qualifies as a First-Time Homebuyer?

The definition of a first-time homebuyer typically includes:

• Individuals who have never owned a home in Canada or abroad.
• Those who have not owned a home in the last four years.
• Must be Canadian citizens or permanent residents.

Additional eligibility requirements and verification processes will likely be introduced once the policy is finalized.

How Much Can Buyers Save?

Let’s break down potential savings under this plan:

For many, this could be the difference between affording a home or continuing to rent.

Impact on High-Cost Markets

Critics argue that in cities like Vancouver and Toronto, where average home prices exceed $1 million, many first-time buyers may not qualify for the exemption simply due to the price cap. For example, in Vancouver, the average home price as of 2025 is $1.2 million (Vancouver City News).

Possible Workarounds:

• Developers may adjust pricing to fit under the $1 million cap.
• Buyers could opt for condos or smaller properties within the price range.

Economic and Market Implications

Pros:

• Boosts homeownership among young Canadians.
• Stimulates housing construction to meet demand.
• Encourages regional property investments outside major urban centers.
• Eases financial burden, allowing buyers to invest in renovations, furnishings, or savings.

Cons:

• Limited relief in expensive cities.
• Could increase demand, potentially raising prices in certain areas.
• May require developers to adjust profit margins, particularly in competitive markets.

How This Policy Compares to Existing Homebuyer Incentives?

In addition to the proposed GST exemption, several existing programs assist first-time homebuyers in Canada:

First-Time Home Buyer Incentive (FTHBI)

A shared-equity mortgage program where the government contributes 5%-10% of the home’s purchase price to reduce monthly mortgage payments.

RRSP Home Buyers’ Plan (HBP)

Allows buyers to withdraw up to $35,000 from their RRSPs tax-free to use towards a down payment.

First-Time Home Buyers’ Tax Credit (HBTC)

Provides a $10,000 non-refundable tax credit, resulting in a rebate of up to $1,500.

Buyers may strategically combine these incentives with the GST exemption to maximize financial benefits.

Practical Advice for Buyers

If you are considering buying your first home, here are steps to prepare:

1. Check your eligibility as a first-time buyer.
2. Research homes priced under $1 million in your region.
3. Consult with a real estate agent familiar with local market trends.
4. Explore additional incentives like the FTHBI, HBP, and HBTC.
5. Stay updated on official announcements via Canada.ca.
6. Start organizing your financial documents and mortgage pre-approvals early.

Expert Opinion

According to economists at RBC Economics, removing GST could provide an immediate affordability boost. However, they caution that supply constraints in urban centers may counteract long-term affordability gains if demand spikes without adequate housing development.

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FAQs

1. When will this GST exemption take effect?

The policy is currently a proposal. A timeline will be available once the government finalizes and passes legislation.

2. Will this apply to resale homes?

No. GST typically applies only to new homes. The exemption would benefit first-time buyers of newly constructed properties.

3. Can I still get other government incentives?

Yes. Buyers may also qualify for the First-Time Home Buyer Incentive, RRSP Home Buyers’ Plan, and Home Buyers’ Tax Credit.

4. What if my home costs slightly over $1 million?

As of now, homes over $1 million would not qualify for the GST exemption. Buyers may need to negotiate prices or consider smaller homes.

5. Will this policy affect mortgage approval criteria?

No. Mortgage approval processes and criteria remain unchanged, though buyers may find it easier to qualify with lower upfront costs.